1. Organization and Summary of Significant Accounting Policies

Nature of Business

Live Current Media, Inc. was incorporated under the laws of the State of Nevada on October 10, 1995. Evasyst Inc. ("Evasyst") was a private company founded on December 18, 2015, in San Diego California, that operates a social video application called KAST. On April 22, 2022, Live Current Media completed its reverse merger with Evasyst (the "Merger"), and the business conducted by Evasyst became the primary business conducted by the Company (see Note 2). As used herein, "Live Current" refers to the Company as it existed prior to the Merger, and the "Company" refers to the consolidated accounts of Live Current and its wholly owned subsidiary Evasyst after the Merger. Accordingly, the accompanying consolidated financial statements are the historical consolidated financial statements of Evasyst for all periods presented and include the net assets and results of operations of Live Current after April 22, 2022 (see Note 2).

During the year ended December 31, 2022, the Company acquired the business of Guru Experience, Co. ("Guru), and acquired certain assets from PowerSpike, Inc. (see Note 3).

Going concern

The accompanying consolidated financial statements prepared under the assumption that the Company will continue as a going concern. The Company has not achieved profitable operations, has incurred recurring operating losses since inception, and has negative working capital at December 31, 2022. These factors raise substantial doubt about the ability of the Company to continue operating as a going concern within one year after the date the financial statements are issued. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company's ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to further develop its business. To date, the Company has funded operations through the issuance of capital stock and debt. Management plans to continue raising additional funds through equity or debt financings and loans from directors. There is no certainty that further funding will be available as needed. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty should the Company be unable to continue as a going concern.

Inflation and Economic Disruption

Our business is dependent in part on general economic conditions. Many jurisdictions in which our customers are located have experienced and could continue to experience unfavorable general economic conditions, such as inflation, increased interest rates and recessionary concerns, which could negatively affect demand for our products. Under difficult economic conditions, customers may seek to cease spending on our services and products, which could negatively affect our financial performance. We cannot predict the timing or magnitude of an economic slowdown or the timing or strength of any economic recovery. These and other economic factors could have a material adverse effect on our business, financial condition, and results of operations.

COVID-19

The global outbreak of the novel coronavirus (Covid-19) in early 2020 led to disruptions in general economic activities as businesses and governments implemented broad actions to mitigate this public health crisis. Management believes that the Company's financial results for the twelve months ended December 31, 2022 have not been materially affected by COVID-19. The extent to which COVID-19 may impact the Company's business activities and capital raising efforts will depend on future developments, which are uncertain and cannot be predicted.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The accompanying consolidated financial statements prior to the closing of the Merger include the accounts and operations of Evasyst as Evasyst was determined to be the accounting acquirer for financial reporting purposes. The consolidated financial statements subsequent to the closing of the Merger include the accounts of the Company and its wholly owned subsidiaries Evasyst and Guru. All intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. On an ongoing basis, management reviews its estimates and, if deemed appropriate, those estimates are adjusted. Significant estimates include those related to assumptions used in valuing assets acquired in business acquisitions, impairment testing of goodwill and other long-term assets, assumptions used in valuing stock-based compensation, the valuation allowance for deferred tax assets, revenue recognition, allowance for doubtful accounts, depreciable lives of assets, accruals for potential liabilities, and assumptions used in the determination of the Company's liquidity. Actual results could differ materially from those estimates.

Revenue Recognition

The Company recognizes revenue based on contracts with customers. A customer contract exists when both parties have approved the contract and are committed to perform their respective obligations, each party's rights can be identified, payment terms can be identified, the contract has commercial substance, and it is probable the Company will collect substantially all of the consideration to which it is entitled. The Company derives revenue primarily from subscription- based services. Revenues are recognized when control of these services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

The Company derives revenues from the following sources:

• Revenue from subscription services to the Company's platform services that is recognized over the subscription period. Revenue from subscription services also includes technical support, bug fixes, and when-and-if available unspecified software upgrades;

• Revenue from fees generated for professional and other services provided that are not sold under software subscription arrangements. The revenue for professional and other services is recognized when the service has been rendered.

The Company’s subscriptions services are generally sold as monthly, annual, or multi-year initial terms with renewal provisions on expiration of the initial term. Subscription services are generally payable in advance on a monthly or annual basis over the term of the subscription arrangement, which are typically noncancelable. The Company recognizes deferred revenue at each period end for contracts that have subscriptions that have been paid but expire after period end. The Company’s subscription contracts do not have a significant financing component and customer invoices are paid upfront. There is no significant variable consideration related to these arrangements. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred.

When an arrangement contains multiple performance obligations, the Company accounts for individual performance obligations separately if they are distinct. The Company allocates the transaction price to each performance obligation in a contract based on its relative standalone selling price. Noncancelable software subscription maintenance support services are considered to be a series of distinct services that are substantially the same and have the same duration and measure of progress, and the Company has concluded that they represent one combined performance obligation and revenue is recognized ratably over the contract period.

Deferred Revenue

Contract liabilities consist of deferred revenue and include payments received in advance of performance under contracts associated with software subscriptions. Such amounts are recognized as revenue over the contractual period.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents. Cash primarily consists of bank demand deposits maintained by a major financial institution. The Company's policy is to maintain its cash balances with financial institutions with high credit ratings and in accounts insured by the Federal Deposit Insurance Corporation (the "FDIC"). The Company may periodically have cash balances in financial institutions in excess of the FDIC insurance limit of $250,000 per account per institution. The Company has not experienced any losses to date resulting from this policy.

Accounts Receivable

Accounts receivable are generally recorded at the invoiced amounts net of an allowance for expected losses. The Company evaluates the collectability of our trade accounts receivable based on several factors. In circumstances where it becomes aware of a specific customer's inability to meet its financial obligations to us, a specific reserve for bad debts is estimated and recorded which reduces the recognized receivable to the estimated amount that management believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on our historical losses and an overall assessment of past due trade accounts receivable outstanding. At December 31, 2022 and 2021, the Company had no reserve recorded for uncollectible accounts receivable.

Fixed Assets

Fixed assets are recorded at cost. Depreciation is provided for on the straight-line method over the estimated useful lives of the assets. The average lives of equipment range from three to five years. Leasehold improvements are amortized on the straight-line method over the lesser of the lease term or the useful life. When assets are retired or sold, the costs and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in operations. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Betterments or renewals that extend the life of the assets are capitalized when incurred. Management assesses the carrying value of equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2022 and 2021, the Company determined there were no indicators of impairment of its equipment.

Intangible assets

Purchased intangible assets represent the estimated acquisition date fair value of acquired intangible assets used in our business. Intangible assets with definite lives are amortized over their estimated useful lives. We amortize definite-lived intangible assets on a straight-line basis, generally over periods ranging from one to ten years. Costs incurred to renew or extend the life of our intangible assets are capitalized.

We review intangible assets for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. We measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows that the assets or asset group are expected to generate. If the carrying value of the assets or asset group are not recoverable, impairment is measured and recorded as the amount by which the carrying value exceeds its fair value.

Goodwill

Goodwill represents the cost in excess of the consideration paid over the fair value of net assets acquired in a business combination. The Company allocates goodwill to reporting units based on the expected benefit from the business combination. The Company evaluates reporting units periodically. Goodwill is tested for impairment at the reporting unit level on an annual basis, and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We assess our goodwill for impairment at least annually as of October 1, unless events or a change in circumstances indicate an earlier impairment.

Income Taxes

The Company uses an asset and liability approach for accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company's policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

Leases

The Company determines whether a contract is, or contains, a lease at inception. Right-of-use assets represent the Company's right to use an underlying asset during the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments.

Stock-Based Compensation

The Company periodically issues stock options, warrants, and stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. Such awards are generally time or performance vested and are measured at the grant date fair value. Depending on the conditions associated with the vesting of the award, compensation cost is recognized on a straight-line or graded basis over the vesting period. The fair value of stock options or warrant granted is estimated using the Black-Scholes option-pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life, and future dividends. The assumptions used in the Black-Scholes option pricing model could materially affect compensation expense recorded in future periods. The fair value of stock awards is generally based on the trading price of the Company's common stock. Forfeitures of awards are recognized upon occurrence.

Advertising Expense

Advertising costs are expensed as incurred. For the years ended December 31, 2022 and 2021, advertising cost totaled $170,653 and $4,095, respectively.

Fair Value of Financial Instruments

Accounting standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for establishing that fair value. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts and considers assumptions that market participants would use when pricing the asset or liability. The framework for determining fair value is based on a hierarchy that prioritizes the inputs and valuation techniques used to measure fair value:

Level 1 - Quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date.

Level 2 - Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

Level 3 - Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions.

The fair value of financial instruments measured on a recurring basis was as follows as of December 31, 2022:

		As of December 31, 2022
Description		Total	Level 1	Level 2		Level 3
Liabilities:
Warrant liability	$	400,161	-	-	$	400,161
Total liabilities at fair value	$	400,161	-	-	$	400,161

As of December 31, 2021, there was no warrant liability. The following table provides a roll-forward of the warrant liability measured at fair value on a recurring basis using unobservable level 3 inputs for the years ended December 31, 2022 as follows:

		2022
Warrant liability
Balance as of beginning of period - December 31, 2021	$	-
Fair value of warrant liability recognized upon issuance of warrants		591,590
Change in fair value		(191,429	)
Balance as of end of period - December 31, 2022	$	400,161

The Company believes the carrying amount of its financial instruments (consisting of cash, accounts receivable, accounts payable and accrued liabilities, and convertible notes) approximates fair value due to the short-term nature of such instruments.

Net Loss per Share

The Company calculates basic earnings (loss) per share by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding. The Company does not include the impact of any potentially dilutive common stock equivalents in its basic earnings (loss) per share calculations. Diluted earnings per share reflect potentially dilutive common stock equivalents, including options and warrants that could share in our earnings through the conversion of common shares, except where their inclusion would be anti-dilutive. For the years ended December 31, 2022 and 2021, the Company had the following securities are excluded from the calculation of diluted income per share as their effect would have been anti-dilutive to the net loss for the periods.

	2022	2021

Stock options	1,100,000	8,133,012
Stock purchase warrants	8,413,461	-
Convertible debt	18,459,760	-
Stock payable	1,106,639	-
	29,079,860	8,133,012

Concentrations

Revenues. For the years ended December 31, 2022 and 2021, there were no customers that represented 10% or more of total revenue.

Accounts receivable. As of December 31, 2022, the Company had accounts receivable due from five customers which represented 27%, 20%, 18%, 12%, and 11% of total accounts receivable. At December 31, 2021, there were no accounts receivable.

Recent Accounting Pronouncements

In September 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-13, Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses ("CECL") to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 is effective for the Company beginning January 1, 2023, and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will be material to its financial position, results of operations and cash flows.

In August 2020, the FASB issued ASU No. 2020-06 ("ASU 2020-06") "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)." ASU 2020-06 reduces the number of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. The diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. For contracts in an entity's own equity, the type of contracts primarily affected by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective January 1, 2024, for the Company and the provisions of this update can be adopted using either the modified retrospective method or a fully retrospective method. Early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. Effective January 1, 2021, the Company early adopted ASU 2020-06 and that adoption did not have an impact on our financial statements and related disclosures.